Tax Exempt Organizations

For people to deduct contributions to your organizations from their taxable income, you generally must be designated as a 501(c)(3) organization by the IRS. This requires an application process to demonstrate that your organization’s purpose is charitable, religious, or educational in nature. You must provide detail in the application about the work that you do and your mission.

We can assist you in preparing the application so that the approval process will be more efficient.

Meaningful, well-organized financial records ensure that your business operations will run more efficiently on a daily basis and are the foundation of a successful business.

Our qualified staff can assist you with the day-to-day tasks associated with bookkeeping.

There are many parts of non-profit accounting that are much the same as for-profit accounting; both require businesses to track and report their income and expenses. Also, non-profits have all of the same reporting requirements for payroll as a for-profit business, including payroll tax withholding and issuing W-2s at the end of the year.

However, the non-profit’s ultimate function is to funnel their resources back into their mission; this results in requirements that are different from their for-profit peers.

For example, non-profit organizations must meticulously itemize their expenses, across three specific areas: management, program, and fundraising. All functional expenses must be reported, so it’s vital that a non-profit organization have a good cost allocation plan, which will clearly define how every expense has been allocated across all areas as well as to specific programs within the organization. WollackLewitz, LLC, is knowledgeable about these requirements. As part of our tax services for non-profits, we can assist your organization in setting up an accounting system that will fulfill them.

For Not-For-Profit organizations requiring an audit by a Certified Public Accountant, we can perform the necessary procedures to render an opinion that the financial statements present fairly the financial position and results of operations of the organization in accordance with generally accepted accounting principles or another comprehensive basis of accounting. For those organizations requiring their financial statements to be reviewed or compiled by a Certified Public Accountant (CPA), we provide an Independent Accountant’s Report and financial statements with all required disclosures. We perform this service in conjunction with your Form 990 preparation.

Although nonprofits usually don’t pay taxes, they do prepare an annual informational return (Federal Form 990) to showcase how they use their funds and fulfill their mission. Most non-profit organizations will have to file a type of Form 990, with the exception of churches. A Form 990 is basically the tax return for non-profit organizations, but which specific type of the form your organization will use is dependent on the type of your organization and it’s annual revenue and assets your organization reports. As part of our tax services for non-profits, we can assist your organization in preparing and filing this very important form.

Tax-exempt organizations are held to an extremely high standard. They can expect donors, the government, the media, and the general public to all scrutinize their operations, making the proper preparation of Form 990 extremely important.

UBIT (Unrelated Business Income Tax) is a tax imposed on unrelated income generated by tax-exempt organizations.

Unrelated Business Income consists of income generated by the organization from activities that are not related to the exempt mission of the organization. Income is considered to be unrelated if all of the conditions listed below are met:

1. The activity is conducted as a trade or business;
2. The activity is regularly carried out, and;
3. The activity is not substantially related to the exempt mission of the organization.

An organization that has unrelated business income may be required to file Form 990-T to report these activities. However, there are many modifications and exclusions that may exempt an organization from this tax.